AmerisourceBergen Corp. to Buy PharMedium

This morning there is huge news coming from the biotech and healthcare sector. A very well-known drug distributor by the name of AmerisourceBergen Corp. (NYSE:ABC) announced it would buy PharMedium Healthcare Holdings Inc. for $2.58 billion from private equity firm Clayton, Dubilier & Rice. AmerisourceBergen agreed on the deal in efforts of expanding its business of supplying compounded drugs to hospitals.

For those who may not know, Compounding is a process in which pharma merchandises are broken down to create doses that are not sold for commercial purposes.

Since the fungal meningitis outbreak at a compounding pharmacy back in 2012, there has been an increase of regulatory oversight. Due to the 2012 scare hospitals are now spening more to produce compounded goods internally which also lifts demand for large scale firms such as PharMEDium.

According to Eric Coldwell, a research analyst from Baird Equity Research, "PharMEDium brings ABC a complementary service line that is undergoing a growth renaissance as hospitals more aggressively outsource compounded sterile needs in wake of new government regulations."

PharMEDium provides intravenous and local anesthesia products to nearly 3,000 hospitals across the country.

Knowing that PharMEDium would have the potential to get bought out with the foreseeing future Clayton, Dubilier & Rice acquired the company, though the firm did not disclose how much they spent on the acquisition sources say the price tag was around $900 million.

The PharMEDium acquisition is expected to add 22 to 26 cents to AmerisourceBergen's adjusted earnings per share in 2016 and produce savings of about $30 million by 2018, the company said on this morning in a statement.

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